Reform answer to Investor Confidence
“It’s impossible that business climate will remain as it is. We are in 120th place worldwide for investment attractiveness,” said Greff on the Troika Dialog Forum. “I believe it will be a key challenge for president and government. I believe in a positive trend, but it should improve quick enough to overtake rivals. And this will depend on the efficiency of a future government.”
The changes the Russian economy needs to go through and the challenges it faces at the moment have become the key topics for discussions at the Forum Russia 2012 currently underway in Moscow.
German Greff considers the event an opportunity to build confidence for investors to come to Russia.
“A key word for investments is trust. You would never give your money to somebody you don’t trust or don’t understand”, he stressed. “So the key mission for this forum is increasing trust in Russian business, Russian authorities and Russia in general. We as a central financial institute want to increase investor credibility as we can be a provider for the investments”
Ruben Vardanyan, the head of Troika Dialog agreed with Mr Greff, saying the whole idea of the Forum is to make people know and understand Russia. “We’d like investors to feel more comfortable while investing in the Russian economy. We want to discuss key problems, so the people could better understand what’s going on in our country”.
Many of the speakers at the summit emphasized the need for more reform.
“We see that without significant reforms Russia’s growth potential is not more than 0.5% as the demographic setting is bad, the middle-aged population increases, population growth is lower than India or Brazil”, said the American economist Nouriel Roubini. He emphasized the country needs to have “structural reforms, direct investment, privatisation and less government interference in the economy.”
Experts stressed, that providing reforms will contribute to the ruble’s strength as the Russian currency highly depends on oil prices now.
“Russian currency is a paper version of oil,” says Sergey Guriev, the rector of Russian New School of Economy. “The fact that oil prices stay high and the ruble is stronger just emphasizes how important oil is for ruble. But we shouldn’t overestimate our confidence in ruble, if oil prices go down, ruble will definitely go down.”
Though Russia considers the richest country among BRICS it’s economy growth is slower than those in India or China or even Brazil, he said. “But yet Russia can grow faster than now and for that Russia have to do all the reforms being discussed”, stressed Guriev. “If capital comes to Russia it will grow faster than 4% per year. And other BRIC economies will catch up with Russia. But Russia will be in BRICS community, a place good to invest in, a place that grows faster than developed countries”.